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Zucas said:
Kinda a silly point because all companies ass for "royalties" (or better put licensing) to develop on their platform. Complaining about it is really a moot point as the only way to get around it is to well develop hardware yourself.

They're not saying that royalties overall are bad, just that the platform leader (in this case, Nintendo) tends to get greedy with the royalty rates that they set. Judging by how they phrased it, I'd guess that they think that the PS2 charged too high a royalty rate.